Reading Charts in Real Time

[MidKnight 12]

Just on the concept of the three indians thing (or maybe also known as 3 thrusts), I trade that type of thing a fair a bit on indexes, but I also require a sizeable move as the criteria for it. I find that is more reliable if it is coming after strong momentum, rather than before any momentum has really manifested. A lot of fast moves start out as creepers.

 

With kind regards,

MK

[forrestang 10]

Probably too early to look for something so specific, but G/J looks cleanest in line with S/R right at that horizontal line I drew.

 

We'll just have to wait and see:cool:

 

-----EDIT-----

Here's another look with the hour chart. Possibly Support slightly higher as well. Although I like the lower level a little better as it clearly shows a trading range above and below it.

 

Not to bragg or anything:cool:

 

But seriously, it bounced at the level I chose, but the entry didn't seem to be that obvious? I wasn't in front of my computer, and honestly I dont think I would have taken this. Is there an entry here? I'm sure one can look really deeply to find one, but what about the obvious type entries?

 

Have we moved too far off that support level to continue to look for the H-HL?

[thalestrader 14]

How about the long option for the above trade?

Could it have been a valid setup at the time?

 

As I mentioned to Brownie in another thread, while trading the HH/HL is probably robust enough to yield a profitable mechanical system over time (Kiwi would be more qualified to comment on this than I), I would not recommend that a discretionary trader trade this (or any) approach in isolation from S/R considerations.

 

In this case, as price had rallied into anticipated resistance, longs, for me at least, would be off the table until price either 1) breaks out above that resistance or 2) declines to a potential support level of comparable significance to the resistance level that turned price away.

 

I was unable to be at the screen today. But I did not see that L/H/HL sequence until you pointed it out. I may or may not have seen it if I had been watching in real time. Had I seen it, I would not have been interested in a long, though it may have shaken me out of my initial short. Had I been shaken out, I would have re-shorted at the point eNQ pointed out in his post #1063 (do we realy have over 1000 post in this thread?)

 

They say that hindsight is 20/20, though at times like this, telling you honestly how I would have acted in real time is impossible after the fact. I do not know how price was moving (it had settled into a little range, was it chomping at the bit to make a break or was it tentative and meandering? Was news pending? If so, I would have held the short with my initial stop. No news expected? Maybe I would have moved my stop on the short to just above that little high.)

 

When I look at the chart, I can say unequivocally that I would have wanted to be short. But, looking at the chart, who wouldn't have wanted to be short?

 

After the fact, in this case, is very difficult. The fact that it is so difficult leads me to feel that I would not have acted at all to that sequence and I would have held my short. I say this only because the short to me was clear this morning before it triggered, and it is clear to me now. The long entry you point to does not look like anything but noise to me. When I take a trade, even when it results in a loss, it is very, very clear to me. I see exactly what I want to do, where I would know I am wrong, and where I want to take profits. I do not see anything like that at that point today. But again, this is after the fact.

 

All that being said, if someone were to simply trade these sequences mechanically without regard to S/R, then it would have been two losses -5 ticks and -23, and then a winning trade with target at +34 (short at 1.5010 for a 1.4974 target) for a net +6 +/- a few ticks.

 

Best Wishes,

 

Thales

Edited November 11, 2009 by thalestrader
spelling

[MidKnight 12]

Hi guys & dolls,

 

Just a theory I'm entertaining for the next little while, USD/CAD could be going lower and continue to at least the next zone I have marked on this 240m chart. Here is the idea I'll be trading if it happens.

 

After the market really struggling to go lower, I moved the stop to +9 and went to bed. I see it went lower to within 10pips of main target and then hit my trailing stop. Average gain was 12pips yielding 0.43R. Of the 11 trades tried so far, I have only had 1 that just exceeded 2R. Most of my winners are less than 1R. Feels not very ideal. Had I been awake, I don't think the result would have changed much. I can't really fault how I managed the trade idea. I did feel that price would come back up to test the breakdown point (where I entered), but I thought that would be after it went to my main target.

 

So far, my feel is to focus more on the first LH or HL as initial positions and use the subsequent breaks with the momentum as adding locations, maybe even based on the bigger TF. I would like to be able to ride the 240m moves but use the 15m to manage (add/decrease) the position. I've been studying this and it looks great with my hindsight goggles on, but one needs to be patient and accept that they can get lots of base hits for a week or two until the main move actually happens. Might be hard to deal with on a psychological basis.

 

Very nice, MidK. That was very reasonable analysis, with a well structured traidng plan.

 

Congratulations!

 

Best Wishes,

 

Thales

 

Thanks Thales. The idea didn't work out so hot though. I'll be back tonight though

[MidKnight 12]

Not to bragg or anything:cool:

 

But seriously, it bounced at the level I chose, but the entry didn't seem to be that obvious? I wasn't in front of my computer, and honestly I dont think I would have taken this. Is there an entry here? I'm sure one can look really deeply to find one, but what about the obvious type entries?

 

Have we moved too far off that support level to continue to look for the H-HL?

 

Good call man. With my nightvision hindsight goggles on Yeah, I can see a first HL if one was desperate for a reason to get on board to the long side. But like you, it's not obvious to me and I probably wouldn't have been interested in trading it. I personally have difficulty seeing anything clear on GJ or EJ from the 240m chart at the moment. It's too narrow a range for too long, and it's getting narrower. These things can explode :helloooo: The AJ looks more clear to me on the 240m chart.

 

All my best,

MK

[thalestrader 14]

Not to brag or anything ...But seriously, it bounced at the level I chose ... Is there an entry here?

 

Have you ever heard of a Forrest Range Breakout?

 

Best Wishes,

 

Thales

[MidKnight 12]

Have you ever heard of a Forrest Range Breakout?

 

Best Wishes,

 

Thales

 

Serious? LOL

 

Never heard of it myself, but it has a catchy name - and that counts for something!

 

With kind regards,

MK

[thalestrader 14]

EURUSD wants to go a bit higher from the looks of it.

 

Best Wishes,

 

Thales

[thalestrader 14]

EURUSD wants to go a bit higher from the looks of it.

 

Best Wishes,

 

Thales

 

And that takes it to the breakdown point noted by eNQ earlier today (that's yesterday for Kiwi).

 

Best Wishes,

 

Thales

[thalestrader 14]

EURUSD ready to go the other way? We'll see.

 

Best Wishes,

 

Thales

[Dinerotrader 10]

This was a huge move and very fast move for the Aussie dollar. Watching for a fast downward move.

 

 

UPDATE: We have breakthrough but things are going slowly. Stop is 1 tick above the breakout level. Support was found exactly at the top of an upswing a few days back that I drew as a possible support point.

 

Edited November 12, 2009 by Dinerotrader

[MidKnight 12]

I've taken a (sim) short position on what is starting to look like a very minor probe.

 

With kind regards,

MK

[MidKnight 12]

I've taken a (sim) short position on what is starting to look like a very minor probe.

 

With kind regards,

MK

 

Stop moved to BE..........................

[MidKnight 12]

I've taken a (sim) short position on what is starting to look like a very minor probe.

 

With kind regards,

MK

 

Stopped out at even with a MFE of about 30. I'm just not able to get any follow through. Only 1 out of 12 trades has actually followed through so far.

[MidKnight 12]

Once the cable trade was stopped out, I could see the cable crosses setting up a first LH/HL for reversal. Set the orders on GJ.

[MidKnight 12]

Once the cable trade was stopped out, I could see the cable crosses setting up a first LH/HL for reversal. Set the orders on GJ.

 

Well that was fast. Stopped out for 27 pip loss.

[MidKnight 12]

I'm just sitting here frustrated that I got pipped on that GU trade and then suckered into a long on GJ. Pretty consistent with the majority of my breakout attempts in the past. I thought I'd run some numbers against my 13 trades since starting this exploration last week.

 

46% winners

average R of winners 0.81

average R of losers 0.55

PF of 1.26

 

A pretty fine line with a disappointing and frustrating introduction to the style. I know that 13 trades isn't statistically significant, but its starting ballpark figures. I'll be updating these on a weekly basis as a crude but objective measure of performance and hopefully improvement over the course of this exploration.

 

With kind regards,

MK

[Gabe2004 10]

These are my 3 trades from last night.

I froze during the 2nd trade ie. I saw that something is wrong but still let it go to my original stop loss.

It may be a good practice to stick to the rules and let stops be hit but there are times when one has to rely on instinct.

One can argue that instinct would take us out of good trades prematurely.

I have to see which is more true in my case. Am I killing more good trades than I am saving myself from a loss.....

Thales would probably argue that letting my stop be hit was a good thing.....

 

Gabe

[Kiwi 16]

If you're having a hard time at the moment ... realize it isn't necessarily you or the method.

 

The markets are choppy!

 

I've just been looking at 5m 15m 4h etc for the last 8 months while thinking about systematically extracting some dollars. And the last few weeks have not been pretty. You need a mix of trendy and choppy times to analyze how well you are going. Also beware of over-tuning your method to current markets - one of the market wizards pointed out that the markets train you to do exactly the wrong thing - so don't

[Gabe2004 10]

This looks like SOMEONE knew that the news at 8:30 EST will be good.

Not that the overall direction of the market for the day will depend on the news, just the immediate reaction.

 

Gabe

[thalestrader 14]

Stopped out at even with a MFE of about 30. I'm just not able to get any follow through. Only 1 out of 12 trades has actually followed through so far.

 

I'm just sitting here frustrated that I got pipped on that GU trade and then suckered into a long on GJ. Pretty consistent with the majority of my breakout attempts in the past. I thought I'd run some numbers against my 13 trades since starting this exploration last week.

 

46% winners

average R of winners 0.81

average R of losers 0.55

PF of 1.26

 

A pretty fine line with a disappointing and frustrating introduction to the style.

 

Hi Midk,

 

I understand your frustration. I have suffered my share as well over the years. You can continue to be frustrated, or you can identify the source of the frustration and eliminate it. I assume that you would rather eliminate the source rather than continue to be disappointed, so I have some thoughts you might want to consider.

 

With respect to your GBPUSD trade, It looks like your initial risk on that trade should have been about -29 pips. With an MFE of 30, why not have taken 1/2 profits at 1R, then move the stop to break even, especially when that MFE level was at what one might have anticipated to be support? I do.

 

If you do not have 1R between entry and the first profit target, why not skip the trade? I do.

 

When you have a second profit target, why not take off the other 1/2? I do.

 

When you have three profit targets, why not take 1/2 at PT1, 1/4 at PT2, and 1/2 at PT3? I do.

 

In an earlier post, in response to a question regarding trades reaching PT1, I wrote the following (I know it is a long post, but please read it in its entirety):

 

As you are asking about trades involving P1, which I presume is short hand for "Profit Target 1," then you are asking about the manner in which I trade futures. ... As far as futures trades, I have posted a good number of trades here at TL, in real time, most prior to the buy/sell stop entry order triggering, some soon after but well before hitting the first profit target. What % of those trades posted have made it to P1? I do not know, but I figure most of them have.

 

You imply that the fact that I am playing for larger P1's perhaps has a detrimental impact upon winning %. I think the fact that I am playing for larger targets actually improves the winning percentage. Though the fact that I am trading based upon observable S/R is what contributes most to any success I enjoy.

 

I am not a scalper. I am not trying to "guess" where the next two or three ticks is likely to be found. I trade for a decent sized swing. Years ago, at a seminar taught by a well known author and "market wizard," said wizard suggested that short term price movement was more easily predicted than longer term price movements. The point this wizard was trying to make was that it is easier to trade for a point or two (this was pre-emini's and the instrument under discussion was the big S&P contract) than it was to trade for 5-10 points. I bought into this for a long time.

 

But I found that once I started to trade for the next main intraday swing rather than trying to grab a point or two (or worse, a tick or two) my results improved dramatically, both in terms of winning percentage and in terms of overall profitability. This change of focus occurred after I decided to try to trade S/R only, and it coincided, by the way, with my movement from the stage of shock to pleasant surprise. That is, once I saw with my own eyes how well I could anticipate price movements based solely upon price action around S/R, it became a relatively easy step to start using S/R as profit targets, and holding for more than a few points, and being able to resist the urge to allow myself to get shaken out on the slightest reaction against my position.

 

Let me give you an example of another trade. I am currently long the 6B. I would have liked to have bought at 1.6587. I missed the opportunity because my attention was elsewhere. However, when I did open that particular chart, I was so sure that price would at least make it to 1.6625, I bought at the market. I was filled on two contracts (which is small - one tick of 6B is only $6.25, but my entry was late and it is the relatively less liquid Tokyo session, so two was enough). My entry was 1.6601, P1 1.6625, TP2 1.6660, and my initial stop loss was 1.6568. As I was typing this, my P1 was filled, my stop loss is now at my entry (not a perfect situation as my entry is not at a good technical position for a stop) but rules are rules, and that is how I manage my futures trades. I have included a screen shot of the chart, the trade blotter showing the 2 contract buy at 1.6601 and the sell of 1 contract at 1.6624. I have a sell limit at 1.6660 pending. Will price get there? I do not know. P2 targets are hit much less often than P1's.

 

I have taken such a round about way to answer your question (finally), because the answer is that I do not often have a futures trade not make it to P1. I choose my trades carefully. I trade when I can see where price is going to go. This is not voodoo or magic or mysticism or anything of the sort. Imagine the shock you feel when the trade goes right. That "shock" is really excitement. It is not unlike the excitement you see in a child's eyes when they at first start to recognize letters, and then words, and then sentences. Eventually the child progresses to the point where she no longer stumbles across unfamilar combinations, and even the most difficult syllables are read and comprehended as easily as breath is drawn. The child reaches the point where she can as easily as you pick up the morning paper and read it aloud with perfect comprehension. Now, imagine you reach the point where you see these trades with the same ease as you read your morning paper. That is the only way for me to explain it. I do have losses. Usually those losses are when I allow my "thinking" to trade, rather than my "seeing." I had such a trade last week. I thought I had a good trade. My daughter saw that I had made a mistake. What can I say, I am human.

 

I would bet that there are one or two folks who regularly post here at TL who similarly enjoy a good percentage of their trades reaching a first scale out level. I would bet that those traders rely primarily on S/R to direct their trades, and I would bet that to get to that point they have spent tens of thousands of hours watching the same things happen over and over again, while simultaneously having the market hand them more than one person's share of humbling.

 

Best Wishes,

 

Thales

 

I started that post with this paragraph:

 

Could I write down trading rules? Yes, though I am not at all comfortable with calling them "rules." But I do think the way I trade can be communicated in writing. In fact, I believe that it has already been done - by Lefevre, by Livermore, by Baruch, by Darvas, by O'Neil, by Wyckoff, by Schabacker, by Taylor, et al. Support, resistance, trend, consolidation: it is always the same, which leads to the second part of your first question, which is to say, that an effective way to learn to trade in this manner is to observe that the same things happen over and over. Which implies, of course, that no matter what I or anyone else might have to write about trading, no matter how well and clear and lucid the account, reading that material will not translate immediately into the ability to replicate those results immediateley. Trading cannot be learned other than by doing. And doing. And doing.

 

Why not work on taking 1/2 off at PT1, and accept the fact that the other 1/2 will be stopped at break even more often than it will "follow through," to PT2?

 

Why not work on only taking trades where there is a legitimate 1R spread between entry and PT1, and accept the fact that there will likely be a few trades that end up running to PT2 but you sat out because PT1 did not meet the 1R threshold?

 

As far as "follow through," targets beyond PT1 will be especially elusive during times such as these where, as Kiwi noted, the market has been trendless and choppy. Once an identifiable direction returns to the currency markets, you will find that trades in the direction of the trend will very often "follow through," while counter trend trades are best taken out entirely at the first PT. The good news is that this approach works regardless of the market, but your epectations must match what the approach will give you based upon what the overall market is doing.

 

And accept the fact that you will succeed at this only by doing and doing and doing. I still believe that with hard work, study, diligence and patience, you will get to where you wish to be within weeks or months, rather than years, but accept the fact that it will be weeks and maybe moths, and not hours or days.

 

I think that anyone following this thread can see that it is relatively easy to understand the mechanics of what I do. I think that many reading this thread also see that very few of the problems folks seem to have is not with the mechanics of the approach, but with things extraneous to the approach. I see folks trading with 27 profit targets instead of 1 or 2, I see folks drawing triangles and tetrahedrons rather than waiting for price to reach an actual and observable, i.e. empirical support and resistance levels. I see people letting a trade run to within 3 ticks of PT1, only to watch it run 30 ticks back to entry and another 30 ticks to the initial stop loss, in effect, they take a -60 tick loss for the sake of hoping for an additional 3 tick profit. Imagine that, a .05 R/R. As my daughter would say, "Yikes!"

 

Finally, I have said elsewhere here at TL that for every "rule," or "guideline," or "I do," that I post, I have a bushel basket of trades in which I have violated one or more. But, when I first got serious about this appoach, I learned quickly to develop those money management guidelines, and I stuck to them for quite some time before I ventured to violate them. It might be helpful to you if you were to try them for a little while and see if they do not help you overcome that which is causing you such frustration. I am sure you are not alone in feeling as you do. And anyone else here who is likewise frustrated might also consider adopting those guidelines for a while to see whether or not they offer a good fit.

 

Best Wishes,

 

Thales

[forrestang 10]

Stopped out at even with a MFE of about 30. I'm just not able to get any follow through. Only 1 out of 12 trades has actually followed through so far.

 

I almost shorted the G/U last night, I had a resting sell stop but literally pulled it last second. I see it moved on to quickly hit my P1. I then would have moved my stop to BE and it would have stopped me to the tic essentially before moving on to hit my P2.

 

Lately, since I've been more interactive with managing my trade, my P2 has become more a mattter of ceremony than anything else, in that I'm not getting much out of my 2nd half of my trades lately.

 

So I know what you mean about follow through.:doh:

[forrestang 10]

Blue line would be entry if the HL remains intact.

 

Purple lines are just S/R levels picked at some point.

[fxThunder 10]

Looking for a long on EUR.USD.

 

2 charts included, 15 min and 240min

[thalestrader 14]

Purple lines are just S/R levels picked at some point.

 

Funny how S/R levels "picked at some point" have relevance at this point. The market has a better memory than we do at times.

 

Best Wishes,

 

Thales